Modern

Modern Auditing:
Auditing:

Assurance
Assurance Services
Services and
and the
the Integrity
Integrity
th
of
Financial
Reporting,
8
of Financial Reporting, 8th Edition
Edition
William C. Boynton

California Polytechnic State

University at San Luis Obispo

Raymond N. Johnson
Portland State University

Chapter 3 Professional Ethics

Chapter
Chapter 3
3 Overview
Overview

Ethics
Ethics and
and Morality
Morality
General Ethics

Ethical Dilemma
Ethical Absolutists
Ethical Relativists

Professional Ethics

Commitment by profession
Ethical Principles and Rules of Conduct

AICPA
AICPA Professional
Professional Ethics
Ethics
Division
Division
Standard Setting
Ethics Enforcement
Technical Inquiry Services

Composition
Composition of
of The
The Code
Code
Two Sections

Principles
Rules of Conduct

Pronouncements

Interpretations of the Rules of Conduct

Ethical Rulings

Ethical
Ethical Principles
Principles
Responsibilities
The Public Interest
Integrity
Objectivity and Independence
Due Care
Scope and Nature of Services

Study
Study Break
Break
1. Which two of the following
elements are member-adopted
sections of the Code:
A. Principles
B. Ethical Rulings
C. Interpretations
D. Rules of Conduct
A. Principles and D. Rules of Conduct

Study
Study Break
Break
2. Which ethical principle states that
members should honor the public trust
and demonstrate a commitment to
professionalism?
A. Integrity
B. Public Interest
C. Due Care
D. Responsibilities
B. Public Interest

Rule
Rule 101
101 -- Independence
Independence

Engagement-Based
Engagement-Based Approach
Approach
Covered Members
Prohibited Activities
Immediate Family Members
Close Relatives
Other Professionals and Their Immediate
Family Members

Employment
Employment with
with an
an Attest
Attest
Client
Client
Employee becomes employed by
client
Public Companies
Private Companies

Employee seeks employment with

client

Other
Other Independence
Independence Issues
Issues
Nonattest Services
Private Companies
Litigation
Unpaid Fees

AICPA
AICPA Rules
Rules of
of Conduct
Conduct

AICPA
AICPA Rules
Rules of
of Conduct
Conduct (cont.)
(cont.)

State
State Boards
Boards and
and PCAOB
PCAOB
State Accountancy Statutes and
Laws

Audit Firms of Public Companies

Enforcement
Enforcement of
of the
the Rules
Rules
Joint Ethics Enforcement
Procedures (JEEP)
Joint Trial Board Procedures
Admonishment
Suspension
Expulsion

Automatic Disciplinary Provisions

Study
Study Break
Break
3. Which of the following is subject to
enforcement under the Rules of
Conduct?
A. Independence in Fact
B. Independence in Appearance
B. Independence in Appearance

Study
Study Break
Break
4. Under the joint trial board procedures,
which of the following is not a possible
disciplinary action that could be taken:
A. Admonishment
B. Suspension for five years
C. Expulsion
D. Suspension for two years or less
B. Suspension for five years